Empirical Studies Indicate That MNEs Have Higher Costs of Capital

question 5

Multiple Choice

Empirical studies indicate that MNEs have higher costs of capital than purely domestic firms. This could be due to higher levels of:

• A) political risk.
• B) exchange rate risk.
• C) agency costs.
• D) all of the above

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Definitions:

Empiricism

The belief that our physical senses are the primary source of knowledge.

Immanuel Kant

An 18th-century German philosopher known for his work in epistemology, ethics, and aesthetics, emphasizing duty and moral universality.

Self-Serving Bias

The common tendency to attribute one's successes to personal characteristics and failures to external factors.

Expert Testimony

A form of evidence provided by someone who is recognized as an expert in a particular field or area of knowledge.